Staffing firms’ gross margins expanded for the fourth consecutive year in 2017, according to Staffing Industry Analysts’ new “Gross Margin and Bill Rate Trends - August 2018 Update” report. Analysis of three distinct data sources helps to paint a clearer picture of market trends:

1. Gross margins of publicly traded staffing companies that do business in the US;
2. Gross margins of companies, both public and private, that have participated in SIA’s Staffing Industry Benchmarking Consortium (SIBC) survey; and
3. US Bureau of Labor Statistics Producer Price Index data, which SIA uses to construct bill rate indexes for industrial and office/clerical staffing segments.

Gross margins among the group of 16 publicly traded staffing firms rose by an average of 20 basis points year over year last year, ranging from 15.7% to 41.1%, with an average of 25.3%.

This growth trajectory remained intact through the first half of 2018, with average gross margin expanding by approximately 10 basis points year over year.

“Although gross margins expanded at a generally muted rate in 2017, a tightening labor supply is likely to provide upward pressure on bill rates, which typically benefits gross margin growth.” said Brian Wallins, senior research analyst at SIA and author of the report.

Only seven of the 16 companies reported their greatest annual gross margin after 2008, and just four companies reported their greatest gross margin after 2010. According to the report, one reason annual gross margins have not fully returned to 2007’s pre-recession levels is that the direct hire market, unlike the temporary staffing market, has still not recovered to pre-recession levels.

Robert Half International Inc. (NYSE: RHI) posted the highest gross margin among the staffing firms analyzed at 42.6%, followed by Resources Connection Inc. (NASD: RECN) at 39.6%. On the flip side, Volt Information Sciences Inc. (NYSE MKT: VISI) has the lowest at 16.6%, followed by Kelly Services (NASD: KELYA) at 17.8%.

Corporate members of SIA can view the full report online.